Cash price quotes again put on their stuck-in-cement actWednesday as flatness remained the common denominator among mostmarkets. But snowy conditions in the Rockies couldn’t keep mostof the region’s pipes from softening into the mid $1.90s.Denver-Julesburg Basin gas into CIG yielded about the only Rockiesquotes still above $2. A Denver-area trading firm reportedly closedits offices early Wednesday because of the snowstorm, as did manyColorado schools.
The surprising rise of April futures into the $2.20s led sourcesto believe the overall flatness of the last couple of days will notbe repeated today. One said she had been seeing Columbia-Appalachiaoffers for Thursday on an electronic trading service around $2.34all morning, but after the screen broke through $2.21 resistancethe TCO offers quickly jumped to $2.42. That’s a sure signal ofhigher cash prices today, she said.
The storage withdrawal report of 143 Bcf was a little higherthan some expected, and one source noted that Access futurestrading had already “snapped to attention” in rising above theWednesday settlement. “There are people out there who will tell youApril deserves to trade at a sizeable discount to March” in bothcash and futures, he said. “I disagree. March is still a withdrawalmonth, so any spike in heating demand can be offset with gas fromthe ground. Sure, temperatures warm up a bit in April, but April isan injection month, which adds to incremental demand.”
The National Weather Service outlook for Sunday through Thursdayof next week calls for below-normal temperatures in most of thenation except for the Rocky Mountains states and West Coast. “Muchbelow” coldness is predicted for the Southeast.
A marketer said April basis for Michigan citygates is currentlyplus 12-13, but he expects it to grow to at least plus 14-15 bybidweek “because you can’t transport field-area production into thestate for only 12 cents.” The marketer added that he understands anumber of Michigan in-state producers are thinking about shuttingin low-volume oil wells due to the precipitous drop in crudeprices.
Another trader said Chicago basis has been pretty solid latelyat plus 7. However, it could shrink to plus 5.5-6.5 because ofWednesday’s Nymex strength, he added.
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